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Guyana, a former British colony of less than one million people, is now a major South American oil producer and global petroleum exporter, which will increasingly pose a headache for Nigeria’s struggling oil industry, as well as OPEC+ as it tries to guide the direction of oil prices.
Data from Guyana’s Ministry of Natural Resources shows the country was lifting 351,600 barrels of oil per day at the end of July 2023.
As a result, Guyana is benefiting from a tremendous economic windfall, with the country emerging as the world’s fastest-growing economy with 2022 gross domestic product (GDP) expanding by a stunning 62%.
Industry consultancies and the government in Georgetown expect Guyana to be pumping 1.2 million barrels of crude oil per day by 2027, a figure greater than many OPEC members.
Nigeria’s crude oil production fell by 40,000 barrels per day (b/d) to 1.255 mb/d in July 2023, according to secondary sources in OPEC’s Monthly Oil Market Report (MOMR).
Nigeria’s oil sector contracted for a 13th straight quarter in the three months through June 2023 from a year earlier, as production decreased 13% to 1.2 million barrels per day. That compared with 1.5 million barrels per day from a year earlier.
The Guyana oil boom is being developed by the Exxon-led consortium which holds a 45% stake, Hess, with a 30% interest, and CNOOC, holding a 25% stake.
Exxon prioritized development of Guyana assets in late-2020 due to the Liza oilfield’s low breakeven price of $25 per barrel to $35 per barrel and high-quality light sweet crude oil.
That saw the global energy supermajor ramp up activity with a large exploration drilling campaign that eventually yielded over 30 discoveries and more than 11 billion barrels of oil resources.
Since the first oil discovery in the Stabroek Block was made in 2015, the Exxon-led consortium have approved six projects with the initial Liza phase-1 and 2 developments complete.
There are four more operations being developed, which, on start-up, will significantly lift oil production to at least 1.2 million barrels per day, and perhaps more, analysts say.
These include the 220,000 barrel per day Payara operation, with the first oil slated for late 2023 and the 250,000 barrels per day Yellowtail project, which will commence operations in 2025.
Earlier this year, the consortium approved the $12.7 billion 250,000 barrel-per-day Uaru project, which is expected to start production during 2026.
In the latest news, Exxon and its partners in the prolific Stabroek Block announced they will proceed with the sixth development, the nearly $13 billion Whiptail project.
This facility will consist of 72 wells with a nameplate production capacity of 250,000 barrels per day and commence operations in late 2027.
Once all of those assets are operational, Exxon will have the capacity to lift just over 1.3 million barrels per day from the Stabroek Block, and Guyana’s petroleum output could will see the country exceed the petroleum output of many OPEC+ members and become the world’s 16th largest oil producer.
According to Rystad Energy, the carbon intensity of the oil being extracted is among some of the lowest globally.
That is an extremely attractive attribute for foreign energy companies at a time when big oil is being pressured to sharply reduce emissions and become carbon neutral.
Industry low breakeven prices, estimated by Rystad to average $28 per barrel, make operating in offshore Guyana highly profitable, especially with Brent selling for around $90 a barrel.
Guyana’s growing production and discovered oil resources will boost global supply at a crucial time, which will diminish the influence of the OPEC+ Plus cartel.
In recognition of this and Guyana’s tremendous petroleum potential, OPEC+ is attempting to woo the former British colony to join its ranks. The cartel has invited representatives from Guyana to participate in its meetings in Europe but has yet to officially invite the country to join the cartel.